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The project is a joint effort of the OCCRP and BBC’s Newsnight. Over the next two weeks we will publish more than a dozen stories on this topic.

OCCRP first looked into First Bank in 2009 for a story with ICIJ. From that point, we continued to collect documents and talk to people. Many people wanted to talk over the years but couldn’t. OCCRP was able to collect enough documents to tell the real story. We felt compelled to provide greater transparency for reasons explained here. We will publish just those pertinent parts of the documents to mitigate harm. When the stories have been published, a full version of the documents will be released with the names of non-involved persons and businesses redacted.

First Bank had all the advantages. It was controlled by the Prime Ministers family. It got huge deposits including government money. That money was then loaned out to friends and business partners of the First Family. But it was poorly managed and when it wouldn't listen to regulators, it only made the situation worse. But in the end, it wasn't the First Family who paid. It was the people of Montenegro.

First Bank loan funds were used in illegal construction on Cape Zavala and a waterpark that never happened. Both projects were linked to ruling party vice president and former President of Serbia and Montenegro Svetozar Marovic and members of his family.

Despite the advice of the World Bank, the government of Montenegro refused to seize the bank controlled by the family of former Prime Minister Milo Djukanovic even though a low interest loan hung in the balance. Instead, it spent two years trying to remove government funds from the ailing bank. As a result, the government had to take high interest commercial loans. Again, the state chose the interests of First Bank over the interests of the people.

Then Finance Minister Igor Luksic promised that a bailout of First Bank would be overseen by regulators but instead, the first family’s bank was allowed to do whatever it wanted. And when it came time to pay back tax payers, the majority of the debt was simply switched to another governmental agency.

An analysis of Central Bank reports shows that First Bank systematically broke a number of major laws and regulations governing the banking sector including banking law, anti-money laundering law, generally accepted accounting practices and reporting standards.

Vuk Rajkovic was one of the people in charge of overseeing First Bank’s operations and ensuring it was compliant with banking regulations in 2007. But Central Bank documents show his case represents one of First Bank’s flagrant violations of the rules.

Some of the loans given by First Bank were not issued according to proper banking practice, according to the Central Bank examiners. A significant number of loans, maybe even two thirds, were approved to family members, shareholders, business partners, and other parties connected to the bank, according to PricewaterhouseCoopers.

Former Prime Minister Milo Djukanovic hasn't been truthful about where his consulting firm Global Montenegro got its startup loan. It came from his family controlled First Bank, the same bank whose mismanagement led to a taxpayer bailout. Other family members also got great deals from the bank.

First Bank financed a huge €4.6 million line of credit in 2008 for Svetlana Micunovic, wife of controversial casino owner Branislav Micunovic, without checking her finances, without collateral and without paperwork. They also gave Micunovic’s company Dzek Pot, which had posted significant losses for two years, a €200,000 loan guarantee without conducting any financial analysis or guaranteeing the credit.

Montenegrin taxpayers wound up footing the €4.3 million bill for Madonna’s Balkan debut in 2008. And the real company behind the event was First Bank, according to documents obtained by OCCRP. The concert not only broke promises that no public money would be used, it also depleted First Bank’s resources at a time it was already unable to honor requests for money from its own depositors.

Reactions

A leading Montenegrin anti-corruption agency is filing a series of criminal charges alleging abuse of power for personal gain by an array of top government and banking officials who orchestrated and allowed illegal and risky practices by the First Bank of Montenegro.

Recently, a Montenegrin government daily started a series of stories about the Organized Crime and Corruption Reporting Project and its reporters and editors. The articles to date were inaccurate, negative, lacking any documentation and involved interviews with persons making unsubstantiated charges.